Labor Lessons: Samsung, Hanjin, StanChart

The Samsung business empire, South Korea’s largest chaebol or group of companies, stands out in Korean society not just because of its size but because it avoided activist labor unions.

There are nine unions in the collection of approximately 60 Samsung companies, according to Hankyoreh, the left-wing South Korean newspaper that has the best labor news coverage in the country. But all are either small, company-supported groups established to meet the letter of Korean laws permitting unions at companies, or “ghost unions” that basically exist in name only.

That makes it all the more interesting that a group of four employees at Samsung Everland, the amusement park company that is the linchpin in the crossholdings that form the Samsung empire, on Wednesday said they would form a union. Hankyoreh calls it the first “democratic” union in Samsung’s history.

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The move had been expected after a new law took effect on July 1 that permits multiple unions in a company. The law was passed in 1996 but its implementation was repeatedly delayed because entrenched interests on both sides of the labor-management divide preferred the status quo.

It’s unclear whether the new Samsung General Labor Union will gain traction with colleagues of the four workers. Samsung has reportedly intimidated and even fired workers engaged in union organizing in the past.

The global communications office for Samsung Group, an unofficial entity that basically represents Lee Kun-hee, the son of Samsung’s founder and currently the chairman of Samsung Electronics Co., declined to comment. Instead, it sent a statement that it attributed to Samsung Everland.

The statement said: “Samsung’s priority has always been and will continue to be meeting our employees’ needs and expectations, and providing the best working environment for them. With regard to the new labor policy, Samsung is committed to complying with all relevant regulations. When we receive formal notifications of labor union registration, we will act in accordance with those regulations.”

The business culture at Samsung companies is hugely diverse, even within divisions of firms themselves. About the only traits the Samsung companies have in common is that they say very little publicly about their work and the companies tend to perform well in whatever business they’re in. So the arrival of possibly antagonistic employee representation will be worth watching.

On the other side of the labor-management balancing act in South Korea, however, the pendulum seems to have swung too far in some current labor actions.

Indeed, the lessons for employers from the strikes at Hanjin Heavy Industries and Standard Chartered Korea seem to be: Don’t lay off anyone no matter how poorly your business is doing and give everyone the same raise no matter how well or bad they work.

The first message comes from the strike at Hanjin Heavy in Busan, where workers walked off the job last December because the shipbuilder attempted layoffs. At that time, Hanjin hadn’t received any new orders since August 2008 and, nearly finished working through its order backlog, it faced the prospect of not having anything for workers to do. (Hanjin last week received two orders amounting to six ships, just when it had a handful of ships left to build from orders received before the global slowdown in 2008.)

Reuters

Kim Jin-suk,of the Korean Confederation of Trade Union, on a crane at Hanjin Heavy Industries in Busan, where she has been holding a sit-in since January 6. This photo was taken June 27.

Hanjin settled the strike last month by paying a severance to 300 laid-off workers. But the matter has been turned into a political cause by the leftist Korean Confederation of Trade Unions and Democratic Party since then. Last weekend, about 7,000 people appeared at the shipyard in what were dubbed “Buses for Hope” to show support for the handful of workers who decided to stay on strike after 1,400 others went back to work. Organizers are planning another big demonstration on July 30.

Many demonstrators have been following Kim Jin-suk, a union officer at the shipyard who has occupied one of the cranes in the yard since early January. Ms. Kim, who is 51 years old, has attracted attention from celebrities and politicians. She is one of the strikers who refused to accept the settlement the union reached last month — and remains perched atop the crane, filing Twitter bursts to 18,000 followers.

Meanwhile, the second lesson comes from the ongoing strike at Standard Chartered Korea, which is now concluding its third week.

About 3,000 bankers, or roughly half of the company’s Korea staff, have been on strike to protest management’s effort to link annual raises to performance reviews. Management also wants to do away with a bonus system that’s based on seniority rather than merit.

Standard Chartered closed about 40 or so of its 350 branches around the country earlier this week, saying it wasn’t able to run them efficiently without workers.

The striking workers, in contrast to the demonstrations at Hanjin, have been hanging out at a resort in the coastal city of Seocho. A few hundred came in to Seoul earlier this week for a brief demonstration in front of Standard Chartered’s Korea headquarters. Then, they returned to the resort.